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“The great innovation is to create an incentive that includes a disincentive in the mechanism itself,” says Tasso Azevedo, general coordinator of the MapBiomas platform and one of the architects of the original idea for the mechanism.
The TFFF will also differ to other conservation schemes in how it calculates the areas of forest in question. This is because adding up the carbon stocks of all tropical countries, as is done in various mechanisms, including REDD+, would be a complex and expensive task, while forest monitoring by satellites and remote sensing is simpler and more accessible.
If a country does not have access to these systems, it can use global platforms to make the calculation, explained Leonardo Sobral, director of forests at Imaflora, another Brazil-based civil society organisation taking part in the initiative. MapBiomas, for example, monitors forest cover throughout South America and Indonesia, with plans to expand to Africa.
Who is involved?
The idea for the fund was presented by the Brazilian government in 2023, at COP28 in the United Arab Emirates. It is still being developed by the government with the technical support of various international conservation NGOs, intergovernmental agencies, finance institutions and think-tanks.
In March 2025, a steering committee met in London, UK, to finalise the design of the TFFF. The publication of a further document – the concept note 2.0 – is scheduled for April and will be followed by discussions with countries, potential investors and civil society. According to Batmanian, the final version should be completed by May.
This committee is made up of representatives from 12 countries, among them six tropical forest nations, including Brazil. The other half is made up of developed countries, which would be potential investors in the fund.
With the exception of the United Arab Emirates, these nations usually contribute resources to conservation. For example, Norway, Germany, France, the United States and the UK account for 60 per cent of the US$9.3 billion in pledges to the Green Climate Fund and, with the exception of France, are the main investors in the Amazon Fund.
How the TFFF could operate
The fund will be hosted by a multilateral institution, to be defined once its design has been finalised. One of the options is the World Bank, which has been following the discussions.
Before being launched in November, the TFFF aims to obtain a shadow rating, an unofficial credit rating attesting to low investment risk, from a rating agency. Bonds will then be made available on the market in an attempt to raise US$125 billion for the fund.
The expectation, according to Batmanian, is to secure pledges of US$25 billion by COP30, and leverage the additional US$100 billion in the financial market. Batmanian believes that the product will be attractive to sovereign wealth and pension funds, which are looking for low-risk investments with long-term profitability. Philanthropy would be another focus.
The funds from the TFFF would be reinvested in safe investments, such as government bonds and other fixed-income investments. “For every 100 billion dollars, it is estimated that you would get four billion dollars a year to invest in forestry,” claimed Tasso Azevedo.
According to the draft concept note 2.0, to which Dialogue Earth had access, fixed income investments will be made mainly in emerging country assets, with investments directed towards “green” and “blue” bonds associated with the “global climate transition”.
“We are adopting the principle that no investment can cause damage to the environment or health,” Batmanian added.
How countries can join the fund and use the resources for forests
To participate in the TFFF, tropical countries must have an annual deforestation rate of no more than 0.5 per cent of the total forest area and show a downward trend in relation to the year before applying to the fund. This means being within the global average, according to the committee’s calculations.
“Many countries have already reached this rate,” noted Sobral, from Imaflora. “And so you encourage countries with higher figures to reduce their deforestation in order to enter the fund.”
Based on this criterion, Brazil would qualify to participate in the TFFF. An analysis by Dialogue Earth, based on official data from the National Institute for Space Research (INPE) and the Brazilian Forest Service, shows that the country’s Amazon and Atlantic Forest together lost 0.25 per cent of their native vegetation in 2023 compared to the previous year. Since the fund targets the preservation of tropical rainforests, only these two biomes would be considered in the Brazilian case.
In its application, the country must present a forest monitoring system and a plan for using the resources, earmarking them for public conservation and restoration programmes. At least 20 per cent of the funds must be earmarked for initiatives that benefit Indigenous peoples and traditional communities, Batmanian said.
At the end of each year, countries must publish monitoring reports and send them to the TFFF. To receive payment, the rate of deforestation must be stable or falling compared to the previous year.
The fund’s managers will take into account natural disasters that could destroy forests, such as hurricanes in the Caribbean or volcanic eruptions in Indonesia. In these cases, according to Batmanian, the fund will allow a variation of up to 0.1 per cent.
He also said the rules for applying the resources will not be so rigid as to lock the mechanism in and make it impossible for countries to access: “What unites us is the fact that we have forests, but there are many different economic and social contexts between the 76 countries.”
Challenges and next steps for the TFFF
Tasso Azevedo sees a problem with the fund’s current working model. The proposed financial mechanism prioritises securities from emerging markets and developing economies in its investment portfolio, which offer higher returns, with an average interest rate of 7.6 per cent. This includes tropical forest countries themselves.
For Azevedo, this creates a contradiction: the funds would not come from rich countries buying TFFF bonds, but rather from the proceeds of bonds issued by countries that need to offer high interest rates to attract investors – countries such as Brazil itself.
In practice, says the forestry engineer, rich countries would reap the financial benefits of investing their capital, while at the same time reinforcing their status as supporters of forest conservation. Meanwhile, the real cost of financing conservation would fall on the countries that issue the high-interest bonds.
Another challenge, according to Rittl, will be how to incorporate the monitoring of forest degradation into the fund’s criteria, as this will involve defining differing levels of impacts. The TFFF committee favours this inclusion to prevent degraded areas from potentially profiting as if they were totally preserved. That’s why it has adopted a “pragmatic proposal”, says Rittl.
“At the moment, we’re saying that the degraded forest is the area that caught fire, but that on the satellite image it still appears as forest, because the treetops haven’t burnt,” says Batmanian. “We know there are other forms of degradation. But this is the most common and widespread, and it occurs in all countries.”
Azevedo also questions whether the amount of US$4 per hectare will be enough to discourage deforestation. For him, more important than the payment for preserved forest is the weight of the penalty: in an original proposal, the deduction was pitched at US$3,000 per hectare deforested. “Virtually none of the major commodities that cause deforestation yield more than US$3,000 per hectare. Now, if the payment is US$4, the disincentive wouldn’t be so great,” he says.
What is expected of the fund
According to those involved in its creation, the expectation is that the TFFF, as well as potentially contributing to global climate stability by protecting carbon stocks and preventing greenhouse gas emissions, could also generate real impacts on the lives of local communities and the preservation of biodiversity.
“Before we knew about climate change, the forest was already important for maintaining water, biodiversity, and for local communities and Indigenous peoples,” said Batmanian.
Although the TFFF is not linked to international commitments, Batmanian argued that the initiative can contribute to the fulfilment of global climate pledges such as the Paris Agreement, the Kunming-Montreal Global Biodiversity Framework and the Convention to Combat Desertification.
Carlos Rittl, from WCS, argues that the TFFF should continue without imposing specific laws or policies on the member countries, respecting their sovereignty. But he believes the payments could support the creation of public policies on climate action, strengthen monitoring systems, protect Indigenous rights and improve the living conditions of local communities.
For Rittl, COP30 in Belém will be a unique opportunity to make the initiative a reality and an instrument of real transformation: “If the TFFF is able to mobilise investments on the scale we want, of 125 billion dollars, it will truly be the largest source of resources for forest protection we have ever seen in history.”
This article was originally published on Dialogue Earth under a Creative Commons licence.
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